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Based on the ramsey model and the current covid crisis 1. Government expenditures: Assume that the economy is converging to its long term steady state
Based on the ramsey model and the current covid crisis
1. Government expenditures: Assume that the economy is converging to its long term steady state along the saddle path. At time t=0, it has a level of capital per effective worker given by k(0), which is half of the steady state level of capital, k*. At t=0 it is learned that the government expenditure changes from 0 to a level G(1)>0, and that the change will take place for T periods, and back to 0 thereafter. Show the qualitative dynamics of consumption and capital.
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